Renaix Future of Finance & Audit Survey #FutureOfFinance

Share your views on the future of finance – you could win £100!

Finance and accounting is in a period of transition, with technology, regulation and globalisation driving new ways of working and demanding new skills. Companies should start articulating their vision for finance and accounting in earnest. As a finance professional, you must become aligned with that vision, and have the flexibility to change along with the requirements of your role. We want to gauge the views of professionals around the world, to find out how these changes are affecting you, your teams and organisations. The Renaix Future of Finance & Audit Survey delves into the important shifts underway and what we can expect in the coming years. The results will be used to create a detailed report to be published in the Autumn of 2017.

It will take no more than 10 minutes and responses will remain completely anonymous. You’ll also have the chance to win £100 of Amazon vouchers.

Modern finance – the story so far

Finance as a profession has existed long before the birth of the corporation itself. Traders and merchants of old had dedicated people looking after their accounts and finances before capitalism or industry was even born. In more recent times, the finance and accounting department has broadly been responsible for three main duties: maintaining fiscal control, boosting financial performance and executing day to day operations.

Like any other business function, the focus of the CFO’s department is based on the external market/ regulatory situation as well as internal priorities. As can be seen in the chart below, there has been a greater need for maintaining financial control after the events of the last decade, with an increased focus on risk management. With the situation, more stabilised now, CFOs are again seeking to extract that extra bit of performance using the tools at their disposal. But what does the future hold for finance professionals? And how can you, as a finance professional, stay relevant in the next decade and beyond?

The technology we use

The most visible change to the way business has been done over the past few decades has certainly been technological. From the time calculators and computers were first introduced into the mainstream, we have seen a gradual, yet perpetual, shift in our capabilities and effectiveness. Despite and no doubt because of these radical changes, the march of technology is not likely to slow down any time yet. In fact, the way we do business in the next decade might seem incomprehensible to someone from the present day.

If big data was the key buzzword from the past few years, the main theme of technological change in the coming years is most likely going to be Artificial Intelligence or AI. This is unlikely to be a fully self-aware or sentient system but rather a combination of smart modules which boost human capacity to interpret information and augment decision making.

Some basic forms of such artificial intelligence are already in existence. There are Business Intelligence (BI) software that plug into all other systems, such as procurement, financial data, vendor management systems etc. and automatically highlight areas of improvement. The next step in this regard will be cognitive systems which combine the computational and data sorting capabilities of a computer with the reasoning and problem solving abilities of the human brain. Developers are already working in this area, taking advantage of developments in deep learning and related fields.

However, such automation is not restricted to merely analysis. There are efforts underway to automate a great deal of the still manual processes in the finance function. For example, a group of European banks are working in the area called the “Digital Trade Chain”. The DTC utilises blockchain technology to address the challenges of managing, tracking and securing international trade transactions. This is but one example of the hundreds of prototypes under development by traditional players or newer fintech firms to improve the way finance operates.

The way we learn

When the top management of any company is asked what their most valuable resource is, it is likely the answer will be one of the following: “Our people”, “Employees” or “Human Capital”. The amount of effort that companies put into recruiting, training, motivating and retaining their employees bears testament to this fact.

However, technology is changing what companies look for in their people. Traditional experience within a specific field, whether it be financial planning, accounting, budgeting, reporting, general financial management, treasury management etc. is still important, but technical knowledge about the IT systems which support these functions is increasingly becoming a critical requirement. The finance professionals of the future will have a bigger role to play as strategists rather than accountants. With most of the data-heavy tasks being taken care of by automated systems, the finance professional will have the wherewithal and the tools at their disposal to unlock even more value for their company. There will be a shift from spending most of the time in extracting data to producing insights based on data which is mechanically extracted. This has already been happening at an increasing pace and most employees spend a lot more time making decisions rather than searching for data.

The learning process for finance professionals will also undergo change. The demands of the new roles will require greater strategic thinking and decision making, rather than a rule-based approach to financial management. Although the strategic direction of the company will still be decided by top management, the finance professional will be instrumental in unlocking value for the various business divisions they are supporting.

The way we work

From an operational standpoint, there are a great many changes already underway in how companies operate. A considerable number of companies have adopted agile workplaces which allow for a more flexible work environment without compromising efficiency. For example, some companies now allow middle or back office employees to come to work for four days a week and work from home on the fifth day. Not only does this benefit the employee, but the company then only needs to allocate office space for 80% of their workforce.

Another popular trend is to operate shared service centres. Many large global conglomerates have a single shared service centre located in a low-cost country handling their back-end work with SLAs or Service Level Agreements in force to ensure adequate quality levels, data security etc. This concept has now been taken a step further, whereby a shared service centre (or shared finance centre), caters to the functional requirements of multiple companies rather than just a single global conglomerate.

Many companies and individuals are taking this idea of flexibility/agility to the next level. The trend of freelancing or working on short term contracts is already extremely popular, representing a significant portion of the workforce. Freelancing has always existed but has previously had limited popularity in the finance departments of companies. However, with escalating costs to maintain permanent employees, freelancing has now gained ground in the finance domain. With competent individuals offering their services directly or through an intermediary, companies can hire freelance finance/accounting experts on an ad hoc basis. This saves the company’s investment in training, benefits, downtime etc.

The way we are regulated

The broader finance industry has been trending towards a concept called “managed markets”. The term is primarily used in the pharma industry and implies frequent government intervention, heavy regulation and the industry being on the defensive. The trend has been especially strong in European markets, although other developed and developing economies have now started to prefer more strictly defined structures in finance, accounting, trading and other related functions.

One reason for this shift is to bring in more stability, but a greater motivation has been the direct result of events which have unfolded in the past few decades. Accounting scandals, financial crises, market manipulations etc. have served to erode public (and consequently government) confidence in accounting firms, rating agencies, banks, and even main street companies. The current regulator philosophy is to enforce certain rules on the sector to ensure that the greater public good and customer centrality is maintained.

Being prepared

Companies that hope to do well in the future should start articulating their vision for the finance function in earnest. As a finance professional, you must become aligned with that vision and have the flexibility to change along with the requirements of your role. Sometimes, companies and employees are forced to change their priorities by sudden and unexpected events. However, we have a better understanding today of what skills will be most in demand in the coming years. And we will be best served by being prepared.

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